COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
and (2)
|
|
|
and (4)
|
|
|
and (3)
|
|
|
and (4)
|
Detailed explanation-1: -If a good’s price elasticity is 0 (no amount of price change produces a change in demand), it is perfectly inelastic. If price elasticity is exactly 1 (price change leads to an equal percentage change in demand), it is known as unitary elasticity.
Detailed explanation-2: -E = 0: demand is perfectly inelastic, meaning that demand does not change at all when the price changes.
Detailed explanation-3: -Inelastic (PED is between 0 and 1) If the percentage of change in demand is less than the percentage of change in price, then the demand is inelastic.
Detailed explanation-4: -Perfectly inelastic demand means that the change in quantity is zero for any percentage change in price; the demand curve in this case is vertical. Price inelastic demand means only that the percentage change in quantity is less than the percentage change in price, not that the change in quantity is zero.
Detailed explanation-5: -An inelastic demand is one in which the change in quantity demanded due to a change in price is small. If the formula creates an absolute value greater than 1, the demand is elastic. In other words, quantity changes faster than price. If the value is less than 1, demand is inelastic.